Total Cost of Ownership

Total Cost of Ownership (TCO) is an analysis that places a single value on the complete lifecycle of a capital purchase. This value includes every phase of ownership: acquisition, operation, repair, replacement and the softer costs from the acquisition such as documentation and training. When choosing among alternatives in a purchasing decision, buyers often put too much focus on an item's short-term price, the purchase price, instead of focusing on its long-term price, which is its total cost of ownership. The item with the lowest total cost of ownership provides the best value in the long run.